Cherkizovo Group (MOEX: GCHE) reports its intention to buy from Spain’s Grupo Fuertes a 50 % stake in Tambov Turkey (Pava-Pava brand), the second largest turkey producer in Russia. The consideration will be paid in Cherkizovo Group’s new shares, with Grupo Fuertes building up its stake in the Сompany as a result.
Cherkizovo Group has reached an agreement with Grupo Fuertes on buying its 50 % stake in the authorized capital of their Tambov Turkey joint venture. In consideration for this stake, Cherkizovo Group offered Grupo Fuertes its new shares from an additional issue of 10,261,753 shares registered on March 15, 2021. According to the transaction terms, AIC Mikhailovsky, part of Cherkizovo Group, will buy a stake in the additional issue during the public offering, which will further be handed over to Grupo Fuertes in exchange for its stake in Tambov Turkey.
Cherkizovo Group’s Board of Directors will decide on the price of the share offering on December 15. The price will be based on the market value of shares.
The legal side of the transaction is handled by Cleary Gottlieb. The companies expect to complete the deal in the first quarter of 2022, after obtaining an approval from Russia’s Federal Anti-Monopoly Service.
Following the completion, Grupo Fuertes' stake in Cherkizovo Group will go up. Currently the Spanish company’s share in the Group’s authorized capital is 8.58 %.
The Tambov Turkey joint venture was established by Cherkizovo Group and Grupo Fuertes on a parity basis in 2012. Its first stage was launched in 2015, and in 2017 it started offering Pava-Pava branded products, such as chilled chop meat and ready-to-cook products with natural spices.
The consolidation of 100 % in Tambov Turkey will enable Cherkizovo Group to manage the asset more easily and to strengthen its position in the growing turkey market in Russia. Since 2019, the Tambov-based facility has been ranked as the second largest turkey producer in the country. In 2020, it produced 57 thousand tonnes of live-weight meat. In the summer of 2020, the second stage of Tambov Turkey was launched to increase its total annual capacity to 85 thousand tonnes of meat. This year the facility plans to produce some 80 thousand tonnes.
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